A deteriorating economic climate continues to make life difficult for regional economies, according to Infometrics’ latest monitoring of regional economies. The March 2024 Infometrics Quarterly Economic Monitor suggests that economic activity in the first three months of 2024 was 0.3%pa higher than at the same point in 2023, further slowing year-end growth down to just 0.2%pa – the slowest year-end growth since the original COVID-19 lockdown.

“The economy remains downbeat, with slower spending and investment continuing,” says Infometrics Chief Executive and Principal Economist Brad Olsen. “Current spending growth remains below inflation and population growth, as higher interest rates continue to bite.”

“Marketview spending data shows that too-high inflation and higher interest rates are curbing spending, as households focus on the essentials,” says Mr Olsen. “Consumer spending rose 2.8%pa on average over the year ending March 2024, slower than headline inflation at 4.0%pa, as households pay more but get less.”

“The housing market remains stalled too, with higher listings and still-subdued sales as few buyers can access lending but more households under pressure test the waters on sales,” says Mr Olsen. “House price growth remains weak given more competition in the market, with a larger pool of sellers trying to make a deal with a still-limited number of potential buyers.”

Future construction intentions continue to fall, with residential building consents issued over the March 2024 year down 25%pa from a year earlier. “Consents are down across every region in New Zealand, with a nearly 60% fall in Tasman, and 30-35%pa falls in Wellington, Taranaki, and Northland,” says Mr Olsen. “Construction has been a strong enabler of economic and employment growth in recent years, so these declines will be felt locally.”

“Despite these challenges, exports look to have provided a slightly improved result at the start of 2024, with Lunar New Year delivering a bump in international tourism, and better dairy and horticulture returns are supportive too,” says Mr Olsen. “But meats prices are considerably lower, with mutton prices down 35%pa, lamb down 15%pa, and beef down 1.8%pa, lowering primary sector revenues. Forestry export prices are down 12-20%pa, with forestry removals down too. In slightly better news, on-farm costs have plateaued, providing some relief.”

Employment growth remains solid, with a 2.9%pa annual average increase in filled jobs recorded across the country. “Jobs growth occurred across all regions, with the strongest gains in Marlborough, Auckland, and Otago over the March 2024 year,” says Mr Olsen. “But the labour market is weakening, with the unemployment rate rising and Jobseeker Support recipients up 7.8%pa on average over the last year, indicating more people are looking for work even as job ads show considerable declines.”

ENDS

Note:

The Infometrics Quarterly Economic Monitor is a series of reports about local economies, rather than one comprehensive report. This media release provides a high-level overview of trends and changes to regional economies.

More details about the Quarterly Economic Monitor can be found here: https://www.infometrics.co.nz/product/quarterly-economic-monitor